Fiscal Studliness: IMF Lauds UK's Macho Austerity

A few months ago, I commented on the little girlie man wussonomics emanating from America. If anything else, the free lunch economics that brought the joys of subprime crisis to the rest of the world was, er, magnified by even looser (the spellcheck suggests "loser"; it's pretty smart) fiscal and monetary policies in its wake. As if free money has done Americans any good since then: stock market indices have dropped for five consecutive weeks, job growth is next to non-existent, housing prices are scraping post-recession lows. As Dear Leader Dubya would say, good job, Bennie and Timmy! It's done these deficit deniers no good while adding to their already orgiastic debt load. You call that progress? Only in America.

Let's face it: today's Americans are not used to adversity. The "ask not what your country can do for you, but what you can do for your country" idea is long gone as America is busy flushing itself down the toilet of history. In spite of their irresponsible behaviour, these louts are quite angry, blaming everyone and everything else--even giving God a 33% approval rating. It's never their fault, is it?

In contrast, a previous post of mine also compared how the UK is following a stricter path of austerity. While some British observers alike celebrity chef and "Tiger Dad" Jamie Oliver detect increasing American-style wussiness in British youth, my general impression is that the British retain some of the famous stiff upper lip. While there certainly are crybabies here, the general public still appears to know that free lunches don't exist except in the land of Cheneynomics and other benighted reality-free places (except for "reality TV," that is).

Now we have the IMF performing its annual Article IV consultation on the United Kingdom and giving it a clean bill of health or something which comes close. So inflation is running a tad high and growth a bit low compared to expectations. I personally would advocate raising interest rates in the UK. At any rate, you can read the IMF's statement which says the show must go on and the UK must stay the macroeconomic course which is a totally alien concept to certain deficit lubbers across the Atlantic:

Aided by the implementation of a wide-ranging policy program, the post-crisis repair of the UK economy is underway. However, the weakness in economic growth and rise in inflation over the last several months was unexpected. This raises the question whether it is time to adjust macroeconomic policies. The answer is no as the deviations are largely temporary. Strong fiscal consolidation is underway and remains essential to achieve a more sustainable budgetary position, thus reducing fiscal risks. The inflation overshoot is driven largely by transitory factors, and hence maintaining the current scale of monetary stimulus is appropriate given fiscal adjustment and subdued wage growth. This macroeconomic policy mix will also assist in rebalancing the economy toward investment and external demand. Bank balance sheet repair continues, but vulnerabilities remain and strong domestic measures and international coordination are needed to further bolster financial stability. Indeed, the stability and efficiency of the UK financial system is a global public good due to potential spillovers and thus requires the highest quality of supervision and regulation. Nonetheless, there are significant risks to inflation, growth, and unemployment. If they materialize, the policy response will depend on the nature of the shock.

Now that's a manly response to crisis. The WSJ and FT have more, but you get the general idea. Let's face it: some folks just have bigger huevos than others. This coalition's not for turning? I sure hope so. After all, there's no plan B.